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Six Proven Strategies to Banish the Ghosts of Christmas Past

Ebenezer Scrooge was not dreaming! Frightening Ghosts of Christmas Past really are bumping around in the middle of the night. Not only are these ghosts terrifying, but they can also ruin your holiday season. The Ghosts of Christmas Past are the many unpaid bills that linger, haunting you late at night as you lay awake in your bed worrying about them. These ghosts could easily haunt you after Christmas, well into the following year and beyond.

Quick Facts that Summarize the Problem:

  • 70% of us will slip and overspend our holiday gift budgets (

  • $930 per consumer is the average spending per American on holiday gifts for family and friends (

  • Families with children at home spend an average of $276 per child (

  • $5.5K was the average credit card balance before the holiday season began (

  • 19.34% is the current average credit card interest rate ( $5.5K balance will create a minimum payment of $142.00 per month.

  • If you make only the minimum payment, it will take you 8 years to pay it off, and it will cost you a whopping $8,114, assuming you don’t add any more money to the $5.5K balance (minimum payment calculator at

  • Almost everything costs 10.5% more than last year due to inflation (

Steps to Banish the Ghosts:

  • Step 1: Understand the problem. Update your budget with how much you have coming in and going out. I know people get stressed about budgets, but knowing and understanding is always better than guessing and worrying. Also, a budget puts you in the driver’s seat and allows you to get the best use of your dollars.

  • Step 2: Create a debt spreadsheet. List the name/company of every debt you have, how much your payment is each month, the total amount you owe on that debt and the interest rate. From that information, you calculate your total amount of debt.

  • Step 3: Now that you are organized, you can easily develop a plan to pay off your debts. Write your goals and the steps you will need to take. Below are some proven debt payment strategies you can use in your payoff plan.

Strategies to Pay Off Debt:

1. The Snowball Method involves paying off the smallest debt first. Once the first debt is paid off, you now have more money available to pay off the next- smallest debt (and so on). You keep repeating this process until all debts are paid.

2. The Avalanche Method involves paying off the highest-interest-rate debt first. Once that is

paid off, you put all your extra money toward the debt with the next-highest interest rate.

Usually, the fastest method involves a combination of both methods where you pay off the easy wins and then switch to the Avalanche Method.

3. Balance transfers: Sometimes (depending upon your credit score), you can obtain a new

credit card that allows balance transfers. Frequently, the introductory interest rate is very low or 0%. You may be able to get that rate for one year or longer. At the end of the time frame, the credit card company is counting on you not having paid the loan off so they can charge you their routine, high-interest rate. Read the fine print on transfer balances. You will likely pay a 3–5% transfer fee on the amount you transfer. You may still come out ahead if the interest you’re currently paying is 3–5% higher than what the new card is charging. Commit to paying off this card to avoid the pending higher interest rate.

4. A personal debt consolidation loan from a bank/credit union is a loan to cover multiple

high-interest debts with a lower monthly payment. This type of loan is a good strategy if your

new interest rate is less than the interest rates you’re currently paying on your debts.

5. Credit counseling, for more severe cases, can be a great option. Credit counseling is typically available from a certified credit counselor who gives you information and education and counsels you on how to handle your various debts.

6. A debt management plan, created by a debt counseling agency, involves a special type of

loan. The agency takes all your unsecured debts, creates a low- payment loan and freezes your credit. Creditors agree to forgo excess late fees, reduce their interest rates and past nonpayment fees in exchange for assured payments. Only unsecured debts, such as credit cards, are eligible—not student loans or medical debts. Debt management plans are generally 3 to 5 years in length.

These six strategies have been battle tested and proven to work. You can find more strategies in my upcoming workbook, Escape Debt Prison (by Larry & Lisa Faulkner) coming January 2023. This book will guide you step by step through the process of escaping your debt prison.

Here are some of the many concepts you can learn in Escape Debt Prison:

  • How to reduce financial stress

  • Financial self-care

  • How to rid yourself of financial shame Step-by-step budget construction

  • How to determine which strategy is best for you How to reduce budget stress

  • How to deal with bill collectors

  • When to use bankruptcy and how it works

—Larry Faulkner

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